When buying or selling real estate in Poland, it’s worth knowing what type of ownership you are dealing with. Depending on the type of ownership, there may be different rights and/or costs associated with the property. Below, I summarise the most common modes of property ownership in Poland and what you need to know about them.
Full ownership (pełna własność)
Full ownership, called własność or pełna własność in Polish, is complete ownership of a piece of property. Note that this may mean different things depending on the type of property. For a house or other standalone property, full ownership means you can expect to fully own the land on which the house is located. For an apartment or business premises in a shared building, the concept of full ownership still very much applies to the unit itself, but you should only expect to own a share in the land on which the building is located.
Full ownership is typically the most attractive mode of property ownership, as it allows you the most rights with regards to transferring, building on, or otherwise leveraging a piece of property. For example, it’s significantly easier to mortgage this type of property in Poland than it is any other type.
As for costs, the basic cost associated with full property ownership is property tax, which depends on the land area of the property, the area of any buildings on it, and the local property tax rates. For a 200m2 house on a 800m2 plot in a central area of Poland, my property taxes add up to only about 400zł a year.
Leasehold (użytkowanie wieczyste)
The next most common type of property ownership in Poland is leasehold, called użytkowanie wieczyste in Polish. Legal experts like to call it perpetual usufruct instead of leasehold, but I think the latter is more intuitive for English speakers, so that’s what I’ll use here.
With leasehold ownership in Poland, the leasor owns the land itself and provides it to the lessee for a yearly fee. The leases on leasehold properties almost always last 99 years, and can be renewed as early as 5 years prior to their expiry. There’s typically no problem in extending a lease unless there is a specific public interest or violation of lease terms that warrants otherwise.
One interesting fact about leasehold property in Poland is that the leasor of the land is always a state or local authority: the State Treasury, the voivode, the county, the municipality, or a combination of the above. As a result, it’s possible to convert leasehold ownership into freehold ownership in some cases, for a fee.
On a yearly basis leasehold properties are not subject to the same property tax as full ownership properties. Instead, they are subject to annual lease payments, which tend to be significantly higher.
Limited property rights (prawa rzeczowe ograniczone)
The third type of property ownership (as recognised by the Polish Civil Code) is wide category of “limited” property rights, called prawa rzeczowe ograniczone in Polish. This refers to every other type of property right aside from full ownership or leasehold ownership, including:
- Usage/usufruct (użytkowanie)
- Mortgages (hipoteka)
- Easements (służebność)
Cooperative ownership rights (spółdzielcze prawo własnościowe)
One of the most important types of property ownership in Poland which falls under the wider category of limited property rights is cooperative ownership rights, called spółdzielcze prawo własnościowe in Polish.
This is a common form of ownership in older apartment buildings and is relatively well-protected. In many cases, it can be converted into full ownership with consent from the cooperative that owns the building. Note that to do so, the cooperative must have appropriate documentation proving ownership of the land on which the building is located.
There’s no property tax associated with cooperative ownership rights themselves. However, the cooperative which owns the building does have to pay property taxes, and may pass the financial burden of the taxes onto owners of specific units through building administration costs.
A note on co-ownership (współwłasność)
For all the types of ownership mentioned above, co-ownership is also possible, called współwłasność in Polish. This means that any number of parties can own any number of shares in a property, so long as all the shares add up.
Generally speaking the rights and obligations associated with property ownership, such as rental income in case of the former or property taxes in case of the latter, are divided amongst all co-owners pro rata.
With co-ownership, issues may arise when owners have different plans for the property: for example if one owner wishes to renovate or sell a property and another doesn’t.
There are a few different types of property ownership in Poland, with full ownership being the most attractive. However, leasehold (perpetual usufruct) and cooperative ownership rights are also commonly encountered, as is co-ownership.